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Westlake Legal Group > Posts tagged "John McDonnell MP"

Andrew Gimson’s Commons sketch: Sunak induces sleep, but in his hair a few more streaks of grey appear

Rishi Sunak could be marketed as a cure for insomnia. In years to come, people will say, “I was having awful trouble getting to sleep and then I took a Sunak Statement, and within a minute or two it knocked me right out.”

The Chancellor’s calm, deep voice dispels the restless anxieties which keep us awake however tired we may be. “I will take care of it all, I am today launching a new microloans scheme, I understand how it works, you need not worry yourselves about the detail, leave it all to Sunak, rest your weary post-prandial head, you are working from home, you should make yourself comfortable, you can slumber in peace without anyone seeing you.”

To Anneliese Dodds, the new Shadow Chancellor, fell the tricky task of keeping us awake, or, as she put it, of pointing to problems in the constructive spirit which is now Opposition policy.

She was a vast improvement on her pious, self-regarding, ineffably silly predecessor John McDonnell. Dodds struck a note of genuine moral concern as she related that she had talked to “small business owners who’ve put their heart and soul into their firms”, and have now “got less than two weeks’ cash left”.

How much cash have you got left? There’s a question to keep you awake at night.

But soon we were back to Sunak, gracefully thanking her “for the constructive dialogue”, assuring us that the brand new Bounce Back Loan will be available from Monday, promising us that our system is “one of the most comprehensive and generous anywhere in the world”.

Even when he promised to “one by one fire up the engines of our vast UK economy”, no note of danger darkened the mood. One felt oneself entering a dream world where taking off like a rocket is the most natural, normal, comforting thing, for Captain Sunak knows how to fire up those engines.

Dodds was in the Chamber, but most of the other questioners appeared by videolink, looking like captives in their own studiously unpretentious homes.

None of them managed to penetrate the Chancellor’s defences in a way that might have been possible in the Chamber. This felt like a polite exchange of compliments rather than proper parliamentary scrutiny.

To Sir Graham Brady (Con, Altrincham and Sale West), the Chairman of the 1922 Committee, Sunak said, “I think he makes very interesting suggestions.”

He gave versions of this reply to almost everyone, regardless of what they asked. “Leave it to me” was the gist of it, but said so tactfully, with such modest self-possession, that it was impossible to object; impossible, almost, to stay awake.

And yet, as we examined this slim young statesman, it struck us that in his dark hair, a few more streaks of grey have appeared.

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WATCH: McDonnell – “There’s always a bit of a tussle”, but Labour is not riven by factional warfare

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WATCH: “It’s becoming a bit interminable, I have to say.” McDonnell on Labour’s leadership election.

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WATCH: McDonnell on opportunities for the Left post-Brexit

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As 2020 begins, we look back on ten years in which Tories first led the movement for austerity…and then against it

This decade is only nine years old.  When it ends there will be many different ways of assessing it.  But one aspect is already clear to those who follow British politics.

This has been a decade dominated domestically by the Tory Party.  First, it rode the first big wave – namely “austerity”, the attempt to restore the status quo pre-the financial crash.  Then, just as that wave exhausted itself, it leaped to board the second one: “anti-austerity”.  Labour never got a look in.

Let us explain – with a hat-tip, and more, to Larry Elliott of the Guardian.

The 2010 election was a debate about which party would best restore the status quo ante – that’s to say, the political and economic model founded by Margaret Thatcher and reinforced by Tony Blair.  This was based on London, finance, services, the South, high migration (at least under Blair), a strong pound, relatively cheap foreign labour, law, traditional media and rising house prices.

The voters were not quite willing to entrust the task to David Cameron.  So he formed a coalition with the Liberal Democrats.  As Chancellor, George Osborne then got on top of the worst of Labour’s debt and deficit, and salvaged the economy – though it remained a high immigration, low productivity, southern-based model.

In 2015, the middle of the decade, the Liberal Democrats were punished for entering the coalition, and the Conservatives reaped the political gain of restoring the Thatcher/Blair model to near normality.  Their vote inched up to 37 per cent; Ed Miliband failed to persuade the people that he would deliver a convincing alternative, and the LibDem implosion delivered Cameron a small overall majority.

So the first half of the decade had produced a pro-austerity Tory majority. Cameron then had little alternative but to deliver the referendum he had promised on Britain’s EU referendum.  This had nightmare consequences for him.

Ultimately, as Lord Ashcroft’s polling suggests, the referendum decision was about self-government.  But there was a lot more to it than that.  Those who did well out of the system tended to vote Remain.  Which is why London and much of its hinterland plumped to stay.  (Scotland and Northern Ireland were special cases.)

Most of provincial England, however, didn’t feel it was gaining from the Thatcher / Blair settlement – from the trend to services, finance, the capital and especially high migration.  Lord Ashcroft’s research confirms that the last was the second big factor at play in delivering the referendum result.  When push came to shove, the voters, faced with a binary choice shorn of party politics, voted against the status quo.

And so it was that the cause of Remain, fronted by Cameron and George Osborne, lost out to that of Leave, led by…Boris Johnson and Michael Gove.  The referendum became a blue-on-blue conflict.  Jeremy Corbyn’s position was ambigious and Labour made little impact.

Out went Cameron and in came…Theresa May, after Gove and Johnson fell out.  For a while, she looked like the perfect solution to the Brexit conundrum: a former Remainer who would deliver Leave, and grasped the difference between the Somewheres, with their rooted attachment to place and nation, and the Nowheres, with their lack of commitment to either.

Then came the disaster of the 2017 election.  May over-reached by seeking a mandate both for Brexit and reform.  This reminded non-Conservative Leave voters that the Tories were the party of austerity – a cause that the latter had formally given up on arguing for anyway.

May lost her majority, scraped back into government…and saw her administration vanish into a dispute between Conservatives who ultimately were prepared to leave the EU without a deal and those who would not.  Boris Johnson resigned over Chequers, in the wake of David Davis, and became the de facto leader of the former.

Once again, the main political action was blue-on-blue, with Philip Hammond, Amber Rudd, Oliver Letwin and Dominic Grieve in one corner, and Johnson and the Spartans in another.  The Party lost 42 Ministers to Brexit, including Steve Baker, Sam Gyimah, Dominic Raab, Jo Johnson, Esther McVey, Andrea Leadsom and Rory Stewart.  Labour took no clear position – and was sidelined again.

The rest is recent history.  May was deposed, Johnson entered the consequent leadership election as front-runner, and defied precedent by winning.  After a long series of defeats he then pulled off a near-landslide election victory, in which the Tories became Britain’s working-class party – a transformation that their 2017 wins in Mansfield, North East Derbyshire and Walsall North, inter alia, presaged.

Some will acknowledge these developments while disliking our description of them.  What is “austerity” anyway, they will ask? – pointing out that public spending has risen year on year since 2010. (We add that most departmental spending was reduced during that period.)

In any event, Osborne was accused of easing up on deficit reduction many times: read this Andrew Gimson article, from 2014, and find a list of examples.  The former Chancellor again took a path of least resistance in 2015, when he found £27 billion going spare down the back of the public expenditure sofa.

But you may insist that Osborne and austerity are synonymous.  In which case, we refer you to Philip Hammond’s post-EU referendum autumn statement, in which he junked his predecessor’s fiscal rules.  The new Chancellor promised instead to balance the budget “as soon as is practicable”.  If John McDonnell had said so instead, there would have been a riot (at least in the Tory press).

This takes us to a core point about austerity: one can claim it never happened; or try to define it out of existence; but the word does describe a broad consensus for slowing the growth in public spending that preceded the Coalition.  (Labour also pledged in 2010 to reduce the deficit, but to do so more slowly.)

In one sense, it is clearly outrageous for the Conservatives, having led the charge for public spending retrenchment, the Thatcher/Blair economic model and EU membership, to turn turtle and now push for still higher spending, regional growth and Brexit.

But that’s politics for you.  Labour, torn between pro-Brexit majorities in most of its provincial seats and anti-Brexit passion in its north London fastnesses, was never able to take a clear position one way or the other.  And its Blair/Brown era support for globalisation, and Miliband/Corbyn era unwillingness to renounce relatively high migration, did for it among a big swathe of the white working class.

So will Johnson now be able to finish what he is seeking to begin: the transformation of the Conservatives into a more regional, less London-centric, pro-manufacturing, lower migration, weaker pound, and more-slowly-rising-house-prices party?  ConservativeHome will let you into a secret. We have absolutely no idea.

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WATCH: “The establishment owns the media in this country”, McDonnell complains

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WATCH: McDonnell is worried anti-semitism issue will have impact on Labour vote

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The campaign, week five. Johnson holds his ground – and aims to end next week where he began. With getting Brexit done.

Westlake Legal Group Screen-Shot-2019-12-05-at-16.36.15 The campaign, week five. Johnson holds his ground – and aims to end next week where he began. With getting Brexit done. War on terror ToryDiary Terrorism Tax State Schools Scotland schools North NHS National Insurance Contribution National Insurance Midlands Liberal Democrats Law and order Labour John McDonnell MP Jeremy Corbyn MP homeland security Highlights Education Economy donald trump Conservatives CCHQ Brexit Party  Source: Politico.

Lord Ashcroft’s latest General Election Dashboard, published earlier this week, found that, when it came to recent campaign events, “four in ten voters recalled nothing at all”.  Our proprietor also noted a tendency for both left and right-leaning voters to remember stories and incidents which backed up views they hold already.

This suggests that ConservativeHome’s opening position, set out when we began this series of Friday campaign summaries, has proved accurate to date: namely, that bad campaign weeks don’t usually matter in general elections – and that good and bad campaigns affect the result much less than some suppose.

Jeremy Corbyn has fought much the same operation as in 2017, doubling down and widening out on higher spending pledges, and making the centrepiece of his effort the preposterous claim that Boris Johnson plans to sell the NHS to Donald Trump.

Johnson has fought a very different campaign to that of 2017.  Admittedly, his target voters are the same as Theresa May’s were then – the “just about managings”, as they used to be called.  But his means of appealing to them have been very different.

The manifesto has been kept risk-free; the Chancellor has not been absent; TV debates have been minimised – and executed without major cock-ups (so far).  The terror attack at London Bridge didn’t derail the Prime Minister.  He seems to have got through Donald Trump’s visit without damage.

The sum of events to date is that Labour, as last time, has risen in the polls.    That is as likely to be because the party has had more media exposure than outside election time as for any other reason.  Electoral Calculus now predicts a Tory majority of 28 – well down from the 72 it recorded when we opened this series.

But the Conservatives – unlike in 2017 – have seen their ratings increase, too.  The most probable explanation is that many voters indeed believe that Britain should “get Brexit done” – and find themselves settling on that view, as polling day approaches, regardless of the day-to-day campaigning ups and downs.

If anything during the last four weeks has made a difference, it appears to have been the weakening of the third and fourth parties: the Liberal Democrats and the Brexit Party.  But both are still in the field and the struggle will be complex – far more so at regional and constituency level than Electoral Calculus’ headline total takes into account.

Its findings must be mediated through those local variants: in particular, the separate-but-related contests taking place in Scotland, in the Leave-backing Midlands & North, and in Remain-leaning London with its prosperous hinterland.  If Johnson can do well in all three, that majority should be higher; if does badly, it won’t be there at all.

The sum of polls suggests that the Conservatives will pull off a win.  The last five how Tory leads of ten, twelve, seven, nine and 13 points, according to Britain Elects.  As we write, there is no suggestion of Corbyn closing the gap; rather, if anything, of it opening up again.

Labour could yet close the divide for a mix of reasons: if there is large-scale tactical voting; if the vote distribution works for it; if its ground campaign is sufficiently strong; if the polls are “wrong” – and perhaps above all if there is differential turnout that favours the party.  Is all this possible? Yes. Is it likely? No.

Downing Street and CCHQ cannot afford to take the chance.  Unlike this website or other observers, they cannot afford to gamble that the campaign will end up making no demonstrable difference to anything very much.  They must claw and scrabble for every vote during the final week of this campaign.

Team Johnson that the election will be won by whoever frames the question that voters will ask themselves in the polling booth.  If it’s: “let’s get Brexit done”, then they believe that Johnson will gain his majority.  That’s where the Tory campaign began.  That’s where they want it to end.

There is a quiet sense in Number Ten that Corbyn and his team haven’t developed a framing of their own for this contest.  So expect to see the Prime Minister and company return to their theme over the weekend: break the Parliamentary logjam, get Brexit done – and then Britain can move on.

Downing Street is keen to stress what might be called the populist part of its programme for the first hundred days of a new Tory Government: more education spending, tougher sentencing, higher NHS charges for migrants.  It claims not to have tried to shape yesterday’s reporting emphasis on national insurance tax cuts.

Our nagging worry is: what about voters who may not want to get Brexit done, but are nonetheless apprehensive about Corbyn and John McDonnell’s tax plans?  Will there be nothing in the last few days to help persuade them that a Corbyn Government would plunder their wallets, risk their jobs and threaten their livelihoods?

Weeks One, Two and Three of this series saw the Conservatives doing well – so much so that in that third week we warned against unrealistic expectations.  Week Four saw Corbyn make some progress.  In this final week, Week Five, he seems to have stalled.  But there are still seven tense days to go.

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Now is the time to emphasise the massive tax rises which Labour’s plans would inflict on the nation

A couple of weeks I asked the question: ‘The Conservatives are accused of being fiscally reckless and fiscally over-cautious. Which is it?’ All told, the manifesto was a story of caution – even more so when considered in comparison to the Labour alternative, which has since been followed up by tens of billions more of wildly unfunded spending pledges.

Then again, lots of things seem normal when considered in comparison to Corbynism, and Tories tend to prefer absolute considerations to relative ones. While it’s hard to see Javid and Johnson’s fiscal plans as particularly OTT, it’s fair to say many fiscal conservatives were not madly keen on a general shift of balance from an emphasis on tax cuts and deficit reduction and at least some distance along the curve towards emphasising spending increases. The planned Corporation Tax cut was a victim of that change, having now been cancelled.

Today brought at least a little comfort to Tory tax-cutters, however. The emphasis of the Conservative campaign was on plans for a Brexit budget, to be presented within weeks should they secure a majority, which would include fulfilment of the pledge to raise the National Insurance threshold.

That’s welcome in itself, and will be an instant if modest boost to millions of workers who get to keep more of their own earnings.

It also sends two signals which shouldn’t be ignored. In longer term policy, a long-standing goal for many tax reformers is to bring simplification and greater transparency to the tax system by first aligning and then merging National Insurance and Income Tax. The current NI system is simply deceitful – there’s no real ‘insurance’, no pot of money saved up, it’s just a second Income Tax. That complexity has too often allowed Chancellors to boast of cutting Income Tax while gathering more NI on the sly through fiscal drag. It would be good to eliminate that route for stealth taxation in time.

In the more immediate term, today’s talk of tax cuts hopefully signals a forthcoming intense attack on Labour’s fiscal policies – including, as they do, large tax rises, and even larger spending and liability commitments which will inevitably translate into even more tax hikes.

With a week to go until polling day, it feels like there’s still a fair bit of room in the campaign to really emphasise what a Corbyn government would mean for the finances and futures of every household in the UK – and to shred the demonstrably untrue claim that (as a Momentum video falsely said this week) “under Labour’s plans 95 per cent of people won’t get tax rises at all”.

The evidence suggests this is fertile territory: Labour is betting the farm on the message that they will spend an almost unlimited amount, but voters don’t seem inclined to trust that their plans are realistic, feasible or affordable, and the prospect of financial irresponsibility is  second only to Corbyn himself in the list of voters’ concerns about Labour. Compared to the massively costly tax implications of Corbyn’s plan, a swift but modest reduction in NI is both attractive and encouragingly responsible.

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Ryan Bourne: Five myths about the Labour manifesto

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

1. Only the top five per cent of earners will be affected by Labour’s changes to income tax.

Labour say they only intend to jack up income tax for those earning over £80,000 (with new rates of 45 per cent up to £125,000 and 50 per cent beyond that). But scrapping the marriage tax allowance, while reducing dividend allowances and raising tax rates on dividend income, means they are raising income tax burdens much lower down the earnings scale.

Around 1.8 million families obtained the marriage tax allowance in 2018/19, with 1.5 million more eligible. Over ten per cent of the existing total £13.25 billion dividend tax liability for 2018/19 was borne by savers and basic rate taxpayers, let alone those earning between £50,000 and £80,000. Basic and higher rate payers with dividend income would suffer allowance cuts and see their tax rates rise from 7.5 per cent and 32.5 per cent to 20 per cent and 40 per cent, respectively, under Corbyn’s plans. Many people earning below £80,000, in other words, will see their income tax burden rise.

What’s more, Corbyn’s new tax bands will be for life, not just for Christmas. Thresholds for the 45 per cent and 50 per cent tax rates would be fixed in cash terms rather than indexed – dragging more people into these bands as incomes rise. And, since the rich aren’t some fixed group, over a lifecycle many more people will be affected. Estimates suggest 3.4 per cent of people will enter the top one per cent of earners at some stage in life. Assuming (conservatively) a similar multiple for the top 5 per cent, around 15-20 per cent of income earners would experience higher marginal rates over their lifetime under Labour’s income tax plans.

2. Only the rich will be affected by the overall tax changes.

Richard Burgon intimated on Question Time that only the rich will be affected by Labour’s overall £83 billion revenue grab. We’ve seen that’s not true, but suppose it was: the average increase in revenue for people in the top five per cent of earners would need be £53,000 per year to raise that revenue. Currently, the top five per cent pay £94 billion in income taxes on a gross income of £283 billion. So “asking” for another £83 billion from them (no matter the source of tax) looks, shall we say, “difficult.”

Labour supporters went crazy when I pointed this out, claiming I’d ignored revenue from corporation tax hikes, expanding stamp duty, and more. But that’s the point: Labour’s income tax changes would raise only £5.4 billion of the £83 billion revenues they desire. Their other tax rises have economic burdens that hurt far beyond “the rich.”

The best evidence that we have on the economic incidence of Corporation Tax (which Labour would raise from 19 to 26 per cent) suggests that anywhere between 30 per cent and 70 per cent of the burden ultimately falls on workers. Existing evidence suggests a financial transactions tax will ultimately hit both pension funds and, again, workers. The idea it’s “the rich” or even “business” who pays, leaving ordinary folk unaffected, is just false.

3. Boris Johnson is “lying” about Labour Corporation Tax rates.

Johnson has claimed Labour would raise Corporation tT to the highest level in Europe. C4’s “Fact Check” labelled this “wrong,” explaining that a 26 per cent rate would still be below those economic powerhouses of France, Belgium, Portugal, and Greece.

Labour do reckon they can raise more from Corporation Tax as a proportion of GDP than other developed countries. But, practically, Boris was correct about the headline rate, too – at least, for companies’ UK profits affected by Labour’s expropriation of shares for “Inclusive Ownership Funds.”

Such businesses would be mandated to give up ten per cent of any profits (determined for Corporation Tax purposes) to IOFs. That’s functionally equivalent to another ten percentage point hike in Corporation Tax rate from the point of view of shareholders, taking the UK’s effective rate to a massive 36 per cent – not just the highest in Europe, but the whole OECD.

You might quibble that this isn’t strictly a “tax,” but a shared ownership scheme. But the IOFs are mandated, not voluntary. And any dividends above £500 go directly and entirely to the government. If it looks like a tax, and quacks like a tax….

4. That Labour’s day-to-day tax and spend plans are moderate.

The 2010 election saw Labour argue that planned Conservative cuts of £6 billion in the Parliament’s first year would be huge and devastating. These days, Labour can announce £12 billion per year for WASPI women as a mere manifesto addendum.

This is indicative of where debate is at. Labour plan £150 billion extra in government spending before debt interest by 2023/24 (£83 billion current spending, £55 billion investment spending, and £12 billion WASPI). That’s a 16 per cent jump from today’s projections – equivalent to almost adding another NHS or growing government by up to eight percentage points, permanently, over one Parliament!

Spending at that level has never been sustained here; taxing at it is unprecedented. Some promises – free social care, prescriptions, TV licenses and fixing the retirement age at 66 – worsen the long-term debt headwinds associated with ageing. Then there’s the renationalisations (assumed not to impact the public finances), which history suggests will result in ongoing taxpayer subsidies if Labour intends to follow through in meaningfully reducing prices.

True, Scandinavian countries have sustained governments at Labour’s proposed size. But these social democratic states mainly transfer money, and don’t engage in Labour-style rampant interventionism. Nor do their governments pretend only businesses and the rich will pay.

In contrast, Labour’s tax plans have almost only downside revenue risk. Take hiking Capital Gains Tax rates. Given you only pay it when you sell an asset, many asset holders would likely defer gains and postpone income if a Labour government looked unstable, hoping for a Tory re-election reversing the policy. Elsewhere, heroic assumptions on the revenues from unitary taxation, the financial transaction tax, and more, has seen some legal experts conclude that revenues might be £20 billion lower than Labour plan for, even presuming they are right on the economics of other tax rises.

5. The main economic problem with Labour’s manifesto is that it’s just unaffordable.

Focusing on tax and spend, we downplay the likely massive negative cumulative impact of Labour’s policy on long-term growth.

From property rights incursions to more intrusive wage and price controls; mobilising resources through the Green New Deal to entrenching a quasi-Yugoslavian form of shared ownership, historical evidence suggests GDP will suffer a lot over time. Ignoring this because it’s difficult to measure makes laughable other partial analysis, such as the Resolution Foundation’s report claiming that Labour’s agenda would be better for child poverty.

Labour-supporting economists believe their investment plans are “good for growth.” But when the state competes for resources, the hurdle for improving economic health is whether government activity corrects market failures or is more productive than the private activity it crowds out. Given Labour’s aim for “green” and “social” transformation, and experience of major state investment programs worldwide, colour me doubtful. If you believe a massive new portfolio overseen by politicians such as John McDonnell will hugely improve public sector net worth, I have a £1 Millennium Dome to sell you.

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